Taking some risk off ahead of the US election

Ian Kernohan

2 November 2016

Although our base case assumption is a Clinton victory, we note that the chances of a Trump victory have risen to as much as 30% on some models. We would expect a significant market reaction in the event of a Trump victory and have reduced our overweight in equities, as a partial hedge. Rising bond yields and tension in the Middle East are also potential sources of a spike in volatility. We would expect to buy back after the election result is known, and at lower levels if Mr Trump wins.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.

Although our base case assumption is a Clinton victory, we note that the chances of a Trump victory have risen to as much as 30% on some models. We would expect a significant market reaction in the event of a Trump victory and have reduced our overweight in equities, as a partial hedge. Rising bond yields and tension in the Middle East are also potential sources of a spike in volatility. We would expect to buy back after the election result is known, and at lower levels if Mr Trump wins.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.